Improvements in the labor sector are clearly boosting the chance the Federal Reserve will soon cut back on its easy-money policy stance, a key central-bank official said Monday.

“Recent labor market results seem to suggest that coming months will show continued labor market improvement,” Federal Reserve Bank of St. Louis President James Bullard said. “Based on labor market data alone, the probability of a reduction in the pace of asset purchases has increased.”

Mr. Bullard has been a steadfast supporter of the Fed’s $85-billion-per-month program of bond-buying. The effort has been aimed at driving up growth and lowering unemployment. Improved economic data, most notably on the jobs front, has boosted expectations the Fed will soon begin to cut back on the pace of asset purchases, perhaps at the Federal Open Market Committee meeting scheduled for Dec. 17-18.

Mr. Bullard is a voting member of the FOMC.

Expectations of a cutback in bond-buying–tapering, in the lingo of the market–grew even stronger in the wake of Friday’s release of robust November hiring data. That said, there remains a good bit of uncertainty what the Fed will do next week because officials who have been supporters of the effort haven’t given any explicit signals what will happen.

Much of what Mr. Bullard said in the text of a speech prepared for delivery before a group in St. Louis reprised recent remarks of his. The official has long argued that Fed policy is data dependent. Mr. Bullard has also underscored that even as the economy’s outlook has improved, inflation continued to undershoot the Fed’s 2% target, and central bankers don’t have a good explanation for why this is happening.

Mr. Bullard suggested a way the Fed could balance the conflicting performance of the job market and inflation data.

“A small taper might recognize labor market improvement while still providing the Committee the opportunity to carefully monitor inflation during the first half of 2014,” he said. “Should inflation not return toward target, the Committee could pause tapering at subsequent meetings.”

In his speech, Mr. Bullard continues to lean in the direction of believing the next likely step for the Fed is to pare back the bond purchases in light of mounting economic gains.

“Two key labor market indicators have shown clear improvement over the last year: Unemployment and nonfarm payroll employment,” Mr. Bullard said. “Cumulative progress in labor market outcomes since September 2012 provides the most powerful part of the case for tapering.”

The central banker noted the Fed’s bond-buying program was largely put in place to boost employment, and it seems to have worked. “The Committee’s 2012 criterion of substantial improvement in labor markets gets easier and easier to satisfy on a cumulative basis as labor markets continue to heal,” Mr. Bullard said.

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